% of Cenvat Credit for input service on abated service like Restaurant etc. wef.01.04.16

[jai prakash]

Dear All,

Please guide me on following:

Wef 01.04.2016 Cenvat credit for input service tax will be available on proportionate basis. Is this correct?

Eg. In case of restaurant service, 40% is the taxable value under service tax. In case of rent paid for the restaurant only 40% will be considered for input credit. Suppose ₹ 1,00,000 paid as monthly rent than ₹ 40,000 will be considered for input credit.

Reference of section, rule will be helpful for me.

Thanks

Jai Prakash

[KASTURI SETHI]

Sh.Jai Prakash Ji,

In my view, there is no such amendment in Cenvat Credit Rules, 2004.

 

[Rajagopalan Ranganathan]

Sir,

As a service receiver you are eligible to take credit of full amount of service tax paid by your service provider. Question of availing abatement pertains only to the person who pays the service tax.

[Ganeshan Kalyani]

Sir, I agree with both the experts view. Thanks.

AI Summary

Cenvat credit entitlement: service receivers may claim full input service tax credit; abatement applies to providers only. There is no amendment to the Cenvat Credit Rules, 2004 requiring proportionate input credit for abated services; a service receiver is entitled to claim credit of the full service tax paid, while abatement reduces the provider's taxable value and tax liability and does not curtail the receiver's input service credit entitlement.